The official definition of bookkeeping is the recording of day to day financial information into a predefined book of accounts. That sounds great, but what does it mean?
Day to day financial information: every time you do work or sell something to someone you generate paperwork. Whether it is an invoice for work done, a receipt for something bought from you or a direct debit confirmation for the office electricity supply, it has to be registered somehow.
The predefined book of accounts is a way of categorising everything. HMRC has specific rules as to what is to be recorded and how.
That describes what bookkeeping is, now what does a bookkeeper do?
A bookkeeper makes sense out of the mountain of paperwork. General work involves inputting as much information as possible from each of those receipts and invoices into a software system including their correct category information.
That isn’t the end of it.
One of the things that often gets missed by businesses is bank reconciliation. A process of matching items that have come into and gone out of your bank account. Many times you will find things that haven’t been entered correctly or missed entirely, most frequently monthly bank interest and fees.
If your business is VAT registered, your bookkeeper will be able to make sure that you are compliant. They will also be able to enter your quarterly returns.
Dependent on the software system that your bookkeeper uses there are many other things that you will be able to do with all of this information. One key feature that your bookkeeper will be able to help you with is keeping an eye on outstanding invoices. One of the most significant problems that small businesses have is cash flow. There are many things that you can use to improve this, one of the easiest is to send a statement to your client as a gentle reminder. Your bookkeeper can produce this for you.
The one thing that I haven’t mentioned so far is accountants. Bookkeepers work with your accountant, giving them regular updates and detailed reports. From this information, your accountant will be able to produce end of year returns and advise you on more complex financial matters.
That is just an overview of the things that your average bookkeeper can do. Many bookkeepers are qualified to do more than that. They can run your payroll, enter your self-assessment tax return, cash flow analyses, and the list goes on.
For more information about bookkeepers or to find a bookkeeper in your area go to the Institute of Certified Bookkeepers today.
- On September 20, 2019